Jackson L.J. delivered a speech on costs budgeting on Wednesday. For many of us engaged in CCMCs who encounter inconsistency, courts overwhelmed by the volume of hearings, unnecessary costs incurred and often the thinly disguised frustration of judges with the process, his conclusion that ‘costs management works’, may come as a surprise. His proposals for reform, including fixed costs in some multi-track cases, may not.
In his speech he gave 7 benefits of costs management (see below) but he also dealt with objections and problems and made recommendations. I pick out a few:
First, he mentioned the costs of the process in low value multi-track cases which he defined as up to ‘about £50,000’. Leeds District Judges recommended fixed costs for such cases and Jackson L.J. endorsed the recommendation for fixed costs in the lower reaches of the multi-track ‘strongly’.
Secondly, the issue of judicial inconsistency, unduly long hearings and micro-management he thought should be dealt with by better compulsory judicial training.
Thirdly, the problem of the wide variation in the forms of costs management orders he recommended should be dealt with by a standard form of costs management order.
Fourthly, he thought that the time for filing and exchanging budgets should be increased so that they are lodged 14 days before the CCMC although there must be a discretion for the court to specify a different period.
Fifthly, he was of the view that Precedent H could be improved but he recognised that solicitors had been developing their IT systems for the purpose of completing Precedent H and therefore he did not want to make successive changes.
Sixthly, the problem of delays and backlogs of CCMCs he thought should be tackled by repealing PD 3E which says that courts will generally make a costs management order under rule 3.15 where costs budgets are filed and exchanged. The PD should be replaced with a judicial discretion on whether to make a costs management order and criteria to guide its exercise.
Seventhly, he acknowledged the backlog of clinical negligence cases in London and suggested that all London Clinical negligence cases with CCMCs listed between October 2014 and January 2016 be released from costs management and called in for short old-style CMCs. He thought a similar solution might be required in Birmingham and Manchester.
Eightly, he addressed the issue of incurred costs and the practice of doing as much work before the CCMC in order to shelter costs within the ‘incurred’ column. He did not think that it was appropriate for judges at detailed assessments to treat absence of ‘comment’ on incurred costs as approval. He suggested powers to comment on incurred costs, summarily assess them or set a global figure for any phase to act as an incentive not to put forward excessive incurred costs. In clinical negligence cases he thought that there was a need to introduce pre-action costs management.
Ninthly, Jackson L.J. expressed concern about the increase of court fees introduced in March 2015. He thought they should be disregarded when considering whether a party’s costs are proportionate.
These are just some of the areas touched upon in Jackson L.J.’s speech which can be read in full by following my hyperlink. He ended his talk by arguing that Costs Management was in the public interest. He thought that lawyers disliked it because it meant more work and required us to develop new skills. He predicted that within the next 10 years costs management would be accepted as an entirely normal discipline and people would wonder what all the fuss was about.
For the time being Costs Budgeting is here to stay – but reform is now overwhelmingly likely to occur and we can expect to hear from the Coulson Committee in due course on what form the new rules are likely to take.
The benefits of Costs Management (refered to above)
Both parties to litigation know where they stand financially
It encourages early settlement
It controls costs from an early stage
It focuses attention on costs at the outset
It stops CMCs from being formulaic leading to debate about what is really required
It is fair to give your opposition notice of what you are claiming
It prevents losing parties from being destroyed by costs